Saudi stock index jumps over 5%

05/04/2009 00:00 AST

The Saudi stock market surged over five percent on the first day of trading this week after rising 1.60 percent last week. Stock markets worldwide rallied on Friday after leaders at the G-20 meeting in London on Thursday reached an agreement to tackle the global economic crisis with financial measures worth $1 trillion. The Saudi bourse was closed on Thursday and Friday.

Khaled Al-Harithi, director of Al-Harithi Financial Consultancy, said the G-20 summit would have strong positive impact on Saudi stock market. “Stock markets all over the world reacted positively on Friday following the summit,” he pointed out.

Economic analyst Ibrahim Shaqdar also spoke highly about the G-20 conference in London, saying it was more successful than the previous meeting. He said the $400 billion recovery plan announced by Saudi Arabia would play a big role in boosting the economy.

The Tadawul All-Share Index (TASI) jumped 5.28 percent or 249 points to close at 4,966.38 yesterday. Market breadth was strongly positive with 119 advancers against only 6 decliners.

Gains across the board on the sector front led by an 8.71 percent increase in the petrochemical sector, followed by 5.56 percent for banks & financial services.

“Strong and broad gains among all sectors where TASI has overcome several resistance levels in one session. This drastic change of sentiment among market players would surely reflect good expectations regarding earnings especially for the petrochemical, financial, and telecom sectors,” the Jeddah-based Financial Transaction House (FTH) said in its daily commentary.

The stock market turnover was over SR6 billion yesterday compared to nearly SR20 billion for the whole last week.

Yanbu National Petrochemical Co. was the top gainer as its shared surged 10 percent to close at SR20.90. Shares in Saudi Basic Industries Corp. also increased by 9.97 percent to SR46.30. Sahara Petrochemical Co. shares rose by 9.71 percent to SR15.25 and Rabigh Refining and Petrochemical Co. by 9.69 percent to SR23.75.

The insurance sector also made hefty gains yesterday. The index was up 5.24 percent at 738.08 points. Tawuniya shares jumped by 10 percent to close at SR31.90.

The Riyadh-based Samba Financial Group said in its Economic Monitor for March that the Saudi stock market had shown some recent signs of recovery, though the outlook remained uninspiring. The most notable feature of the sectoral performance is the wide gap between petrochemicals and other sectors.

The Samba report said long-term outlook for Saudi petrochemicals firms was robust given the significant cost advantage provided by access to heavily subsidized feedstock. Nevertheless, with global demand in freefall, the next 12 months are likely to prove uncomfortable.

The stock market is likely to remain subdued this year. Global growth is set to contract significantly, while substantial additional write-downs in the US banking sector are also likely to weigh on sentiment.

Positive performance

The BMG Saudi Index, which comprises the top 30 active companies in Saudi Arabia based on their market capitalization after removing government ownership, ended yesterday’s trading session on a positive note. The index increased by 6.9 percent to 232.63 points. The total turnover rose by 120.3 percent to SR3.6 billion compared to SR1.6 billion registered in Wednesday’s session.

The total number of shares traded also went up by 189.6 percent to 218.8 million versus 75.6 million shares in the previous session. All of the index’s 30 shares went up.

Arab News